Dallas market defies trends in race between rent and home value increases

Dallas market defies trends in race between rents and home values

Unlike most large U.S. metros, Dallas-Fort Worth home values are increasing faster than rents.
Photo by Shoot2Sell

Rent increases are outpacing home values in many cities across the country, but here in Dallas-Fort Worth, it’s the other way around: According to the latest housing data from Zillow, home values here appreciated 11 percent in the last year (from April 2014), while rents rose only 5.5 percent during that same time.

In dollars, the Zillow Home Value Index for Dallas-Fort Worth is $159,700, and the Zillow Rent Index is $1,465. Nationally, the HVI is $178,400, and the RI is $1,364, which represent a 3 percent and 4 percent year-over-year increase, respectively.

Elsewhere in Texas, Houston has a similar story to Dallas. There, home values increased 9.9 percent, while rents went up only 6.1 percent since April 2014.

On a national level, however, rents grew faster than home values in 20 of the 35 largest U.S. metros. In fact, in April, rents grew at their fastest pace in two years, and home value appreciation is expected to slow even further in the second half of the year.

Over the past decade, home values have risen and fallen, but rents have been increasing steadily. Now they are higher nationally than any time since the Zillow Rent Index began tracking those values in 2010.

On average, U.S. renters can expect to spend about 30 percent of their income on a monthly rent payment. Compare that to homebuyers, who can expect to spend about 15.3 percent of their income on a typical house payment. Translation: Buying often beats renting, if you can swing it. Especially in Dallas, it’s a good idea to buy, because here you can recoup the costs of homeownership faster than in other U.S. cities.

“There are tremendous incentives to get into homeownership these days: mortgage access is improving, interest rates are low and home values remain below prior peaks,” said Zillow chief economist Dr. Stan Humphries in a release. “But it will be increasingly difficult for many renters to realize these benefits as this country’s growing rental affordability crisis continues to worsen.”

Over the next year, U.S. home value growth is expected to slow even further, to 2 percent annually, according to the Zillow Home Value Forecast. But not in Dallas, where Zillow predicts a 5.7 percent increase in home values.